vancouver registry no. vlc-s-s-112003 feb 2 7 · pdf filefeb 2 7 2013 vancouver registry ......
TRANSCRIPT
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SUPREME COURT OF BRITISH COLUMBIA
VANCOUVER REGISTRY
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NO. VLC-S-S-112003 VANCOUVER REGISTRY FEB 2 7 2013
IN THE SUPREME COURT OF BRITISH COLUMBIA
BETWEEN:
AND:
MARY WATSON
PLAINTIFF
BANK OF AMERICA CORPORATION, BMO FINANCIAL GROUP, BANK OF NOVA SCOTIA, CANADIAN IMPERIAL BANK OF COMMERCE, GAPIT/\L O~E F I N/\~GI/\L GORP-G-RA-~ CAPITAL ONE BANK
(CAI\JADA BRANCH}, CITIGROUP INC., FEDERATION DES CAISSES DESJARDINS DU QUEBEC, MASTERCARD INTERNATIONAL
INCORPORATED, NATIONAL BANK OF CANADA INC., ROYAL BANK OF CANADA, TORONTO-DOMINION BANK, and VISA CANADA
CORPORATION
DEFENDANTS
Brought pursuant to the Class Proceedings Act, RSBC, 1996 c 50
NOTICE OF CIVIL CLAIM
THIS ACTION HAS BEEN STARTED BY THE PLAINTIFF FOR THE RELIEF SET OUT IN PART 2 BELOW.
If you intend to respond to this action, you or your lawyer must
(a) file a response to civil claim in Form 2 in the above-named registry of this
court within the time for response to civil claim described below, and
(b) serve a copy of the filed response to civil claim on the plaintiff.
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If you intend to make a counterclaim, you or your lawyer must
(c) file a response to civil claim in Form 2 and a counterclaim in Form 3 in the
above-named registry of this court within the time for response to civil
claim described below, and
(d) serve a copy of the filed response to civil claim and counterclaim on the
plaintiff and on any new parties named in the counterclaim.
JUDGMENT MAY BE PRONOUNCED AGAINST YOU IF YOU FAIL to file the response
to civil claim within the time for response to civil claim described below.
TIME FOR RESPONSE TO CIVIL CLAIM
A response to civil claim must be filed and served on the plaintiff,
(a) if you reside anywhere in Canada, within 21 days after the date on which a
copy of the filed notice of civil claim was served on you,
(b) if you reside in the United States of America, within 35 days after the date
on which a copy of the filed notice of civil claim was served on you,
(c) if you reside elsewhere, within 49 days after the date on which a copy of
the filed notice of civil claim was served on you, or
(d) if the time for response to civil claim has been set by order of the court,
within that time.
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CLAIM OF THE PLAINTIFF
PART 1: STATEMENT OF FACTS
THE REPRESENTATIVE PLAINTIFF
1. The plaintiff, Mary Watson, is a merchant and a resident in Vancouver, British
Columbia. She has owned and operated a furniture store in Vancouver, BC, since 1990.
Ms. Watson accepted payments by Visa credit cards and MasterCard credit cards
during the proposed Class Period (as defined in paragraph 15 below).
THE DEFENDANTS
2. The defendant Visa Canada Corporation f'Visa") is a Nova Scotia incorporated
company that is extraprovincially registered in British Columbia with a delivery address
c/o Paul Richardson, Farris, Vaughan, Wills & Murphy LLP, 25th Floor, 700 West
Georgia Street, Vancouver, BC V7Y 1 B3 and is a subsidiary of Visa Inc. During the
Class Period, Visa operated the Visa credit card network throughout Canada, including
British Columbia.
3. The defendant MasterCard International Incorporated ("MasterCard") is
incorporated under the laws of the State of Delaware, USA, and is a subsidiary of
MasterCard Incorporated, a publicly traded corporation under the laws of the State of
Delaware, USA. During the Class Period, MasterCard operated the MasterCard credit
card network throughout Canada, including in British Columbia.
4. The defendant Bank of America Corporation "MBNA" is a publicly traded
corporation under the laws of the State of Delaware, USA, doing business in Canada as
MBNA Bank Canada. During the Class Period, MBNA issued MasterCard-branded
credit cards throughout Canada, including British Columbia.
5. The defendant BMO Financial Group ("BMO") is a chartered bank incorporated
pursuant to the Bank Act, SC 1991 c 46 (the "Bank Acf'). During the Class Period, BMO
issued MasterCard-branded credit cards throughout Canada, including British
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Columbia. During the Class Period, BMO was, along with the Royal Bank of Canada,
one the joint investors behind Moneris Solutions Inc. ("Moneris"), one of the leading
Acquirers (as defined in paragraph 18in Canada ..
6. The defendant Bank of Nova Scotia ("Scotia bank") is a chartered bank
incorporated pursuant to the Bank Act. During the Class Period, Scotiabank issued
Visa-branded credit cards throughout Canada, including British Columbia.
7. The defendant Canadian Imperial Bank of Commerce f'CIBC") is a chartered
bank incorporated pursuant to the Bank Act. During the Class Period, CIBC issued both
Visa- and MasterCard-branded credit cards throughout Canada, including British
Columbia.
8. The defendant Capital One Financial Corporation ~apital One Sank (Canada
.Branch) ("Capital One") is a publicly traded corporation under the laws of the State of
Delaware, USA __ with a ganadian branch. During the Class Period, Capital One issued
MasterCard-branded credit cards throughout Canada, including British Columbia.
9. The defendant Citigroup Inc. ("Citi") is a publicly traded corporation under the
laws of the State of Delaware, USA. During the Class Period, Citi issued MasterCard-
branded credit cards throughout Canada, including British Columbia.
10. The defendant Federation des caisses Desjardins du Quebec ("Desjardins") is an
organization overseeing the Desjardin Group, including its caisses populaires and credit
unions. During the Class Period, Desjardins issued Visa-branded credit cards
throughout Canada, including British Columbia. During the Class Period, Desjardins
owned and operated one of the leading Acquirers (as defined in paragraph 18 below) in
Canada.
11. The defendant National Bank of Canada Inc. ("National") is a chartered bank
incorporated pursuant to the Bank Act. During the Class Period, National issued
MasterCard-branded credit cards throughout Canada, including British Columbia.
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12. The defendant Royal Bank of Canada ("RBC") is a chartered bank incorporated
pursuant to the Bank Act. During the Class Period, RBC issued both Visa and
MasterCard-branded credit cards throughout Canada, including British Columbia.
During the Class Period, RBC was, along with BMO, one of the joint investors behind
Moneris.
13. The defendant Toronto-Dominion Bank ("TO") is a chartered bank incorporated
pursuant to the Bank Act. During the Class Period, TO issued Visa-branded credit cards
throughout Canada, including British Columbia. During the Class Period, TD owned and
operated TO Merchant Services, one of the leading credit card acquirers in Canada.
14. Collectively, BMO, Capital One, Citi, Desjardins, CIBC, MBNA, National, RBC,
Scotiabank, and TD are known as the "Defendant Banks".
THE CLASSES AND THE CLASS PERIODS
15. This action is brought on behalf of members of a class (the "Visa Class
Members") of merchants consisting of the plaintiff and all Canadian resident persons
who, during the period commencing at least as early as March 23, 2001 and continuing
through to the present (the "Class Period"), accepted payments for the supply of goods
and services by way of Visa credit cards pursuant to the terms of merchant agreements,
or such other class definition or class period as the Court may ultimately decide on the
motion for certification.
16. This action is brought on behalf of members of a further class (the "MasterCard
Class Members") of merchants consisting of the plaintiff and all Canadian resident
persons who, during the Class Period, accepted payments for the supply of goods and
services by way of MasterCard credit cards pursuant to the terms of merchant
agreements or such other class definition or class period as the Court may ultimately
decide on the motion for certification.
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FACTUAL BACKGROUND TO THE CREDIT CARD INDUSTRY
17. The defendants Visa and MasterCard operate the two largest credit card
networks in Canada, including in British Columbia. In 2009, Visa had approximately 31
million credits cards in circulation and MasterCard had approximately 44 million. In
2009, approximately 670,000 merchants across Canada accepted Visa or MasterCard
credit cards. In 2009, the Canadian credit card market had $265 billion in purchase
transactions. Visa's share of these transactions was approximately 60°/o and
MasterCard's share approximately 30°/o.
18. Each credit card network involves contracts with issuing banks that are
authorized by the defendants to issue credit cards to consumers bearing the trademarks
Visa and/or MasterCard ("Issuing Banks") and acquiring financial institutions that
function as payment processors to merchants ("Acquirers"). The Defendant Banks are
all Issuing Banks.
19. The credit card industry is characterized by contractual relationships amongst
and between Visa, its Issuing Banks, and the Acquirers, and amongst and between
MasterCard, its Issuing Banks, and the Acquirers, giving each credit card network
market power in the Canadian market for credit card network services.
20. The agreements and contractual relationships that govern the Visa and
MasterCard credit card networks constitute two separate, but interrelated conspiracies
in operation by way of contracts which are between and among:
(a) the Visa network and its member banks (which are Issuing Banks and
Acquirers ); and
(b) the MasterCard network and its member banks (which are Issuing Banks
and Acquirers ).
21. In essence, the Visa and MasterCard networks are organizations that facilitate
credit and debit card transactions. They do so by setting standards for the exchange of
transaction data and funds among merchants, Issuing Banks, and Acquirers. The
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networks also provide authorization, clearance and settlement services for all Visa and
MasterCard branded payment card transactions.
22. Certain Issuing Banks, such as the defendants CIBC, Desjardins, and RBC, and
all Acquirers participate in both credit card networks. Certain Issuing Banks, including
the defendants BMO, Desjardins, RBC, and TO, are also Acquirers or own large stakes
in Acquirers.
23. In order to accept payments by Visa or MasterCard credit cards, merchants must
enter into agreements with Acquirers. These agreements include standard terms and
conditions imposed by the Issuing Banks and Visa and MasterCard through their
respective agreements with the Acquirers. These agreements include the terms of the
Visa International Operating Regulations (the "Visa Rules") and the MasterCard
International MasterCard Rules (the ~~MasterCard Rules").
24. Every time a customer uses a Visa or MasterCard credit card to pay a merchant
for a good or service, that merchant must pay a fee, commonly referred to as a
~~Merchant Discount Fee". The Merchant Discount Fee is calculated as a percentage of
the sale price of the good or service supplied. The Merchant Discount Fee is the
difference between the price a merchant charges for a good or service and the amount
that is paid to the merchant by the Acquirer. In 2009, merchants in Canada paid
approximately $5 billion in Merchant Discount Fees.
25. The Merchant Discount Fee is divided into three parts: the ~~Interchange Fee"
paid to the Issuing Bank associated with the customer's particular Visa or MasterCard
credit card, the "Service Fee" retained by the Acquirer and the "Network Fee" paid to
either Visa or MasterCard. The Interchange Fee is typically 80o/o of the Merchant
DiscotJnt Fee.
26. Through agreements with the Issuing Banks and Acquirers, Visa and MasterCard
constitute an unlawfully created and maintained duopoly in the Canadian credit card
network services market that leverages their market power to earn supracompetitive
profits from Canadian merchants, including the Visa and MasterCard Class Members.
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27. During the Class Period, the Visa and MasterCard networks each set and made
available default minimum rates for the calculation of Interchange Fees for use by
Acquirers and Issuing Banks within their respective credit card networks. These
minimum rates set a baseline that applied to the vast majority of purchase transactions
within the Visa and MasterCard credit card networks.
28. Interchange Fees vary from card to card depending on the services and
incentives bundled with the credit card. Premium credit cards that offer consumers
additional incentives such as reward points typically carry a higher Interchange Fee.
Merchants are not made aware of the Merchant Discount Fee that will apply to any
particular purchase with any particular card until the Acquirer reimburses the merchant.
29. Interchange Fees are also structured to impose different rates on different types
of merchants. For instance, Interchange Fees on grocery store and gas station
transactions are lower than interchange fees on most other retailers. The defendants'
market power gives them the ability to price discriminate in this manner.
(a) By enforcing adherence to the Visa Rules and the MasterCard Rules, the
Visa network and MasterCard network have created agreements or
arrangements that impose significant restrictions on the terms upon which
Acquirers supply credit card network services to merchants under the
merchant agreements (the "Merchant Restraints". Both the Visa Rules and
the MasterCard Rules impose substantially the same restraints,
includingthe requirements that merchants must honour all credit cards of
the same network (the "Honour All Cards Rule") and may not impose
surcharges on purchases made using any credit card of the same
network, regardless of the Merchant Discount Fee associated with use of
a particular credit card (the "No Surcharge Rule").
30. The Merchant Restraints prevent merchants from effectively encouraging
customers to use lower-cost methods of payment, and from declining to accept certain
Visa and MasterCard credit cards, including those with higher Merchant Discount Fees
such as premium credit cards. The Merchant Restraints prevent merchants from
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applying surcharges to payments made by Visa and MasterCard credit cards as
compared to other modes of payment such as cash and debit cards. The effect of the
Merchant Restraints is to impede or constrain competition for credit card network
services, including competition with respect to Merchant Discount Fees.
31. As a consequence of the Merchant Restraints, consumers pay the same prices
for goods and services supplied by merchants regardless of mode of payment, despite
the higher cost to merchants of Visa and MasterCard credit card transactions.
32. The effect of the Merchant Restraints is that Merchant Discount Fees in Canada
are far in excess of similar fees in other jurisdictions where the Merchant Restraints are
not applied or are applied differently.
33. In the typical Visa or MasterCard transaction, funds flow from cardholders to
Issuing Banks, including the Defendant Banks, which deduct the Interchange Fee, and
then to Acquirers who deduct the Service Fee, pay the Network Fee to Visa or
MasterCard, and finally pay the residual to merchants (i.e., the purchase price on any
transaction less the total applicable Merchant Discount Fee). Information regarding
every Visa and MasterCard credit card transaction is distributed to either Visa or
MasterCard along with the applicable Issuing Bank and Acquirer associated with that
merchant. During the Class Period, the allocation of the Merchant Discount Fee into
Interchange Fee, Network Fee, and Service Fee was not disclosed to merchants.
34. Visa, MasterCard, the Issuing Banks, and the Acquirers seek to maximize the
aggregate Merchant Discount Fees paid by the Visa and MasterCard Class Members
through the two networks.
35. Issuing Banks bundle credit cards with various features such as rewards and
points. Visa and MasterCard Class Members pay some or all of the cost of these
features, essentially subsidizing the Issuing Banks' promotional schemes.
36. The structure of the Visa and MasterCard credit card network schemes allows
Issuing Banks to create powerful incentives for customers to use Visa or MasterCard
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credit cards for as many transactions as possible, offering reward points for each dollar
spent on premium credit cards.
37. The Merchant Restraints allow Issuing Banks to offload the cost of these
promotional schemes onto merchants, who must choose to accept whatever fees are
charged or not to accept credit cards at all. The Honour All Cards Rule forces
merchants to accept any and all Visa and MasterCard credit cards, no matter how high
the fees for using that particular card. The No Surcharge Rule prevents merchants from
passing this additional expense along to customers who pay with premium credit cards.
38. The operation of the Visa and MasterCard credit card network schemes by the
Defendants are intended to maximize, increase, and maintain the total Merchant
Discount Fees paid by merchants, including the Visa Class Members and MasterCard
Class Members.
THE VISA CONSPIRACY
39. Various Issuing Banks, including the defendants CIBC, Desjardins, RBC,
Scotiabank, and TO, along with others not named as defendants participated as co-
conspirators in the alleged unlawful conduct and entered into anti-competitive
agreements, including agreements with Visa, each other, and other Issuing Banks
regarding the rates of Interchange Fees paid to Issuing Banks by Acquirers within the
Visa credit card network. Visa, CIBC, Desjardins, RBC, Scotiabank, and TO are jointly
and severally liable for the actions of, and damages allocable to, Visa and the co-
conspirator Issuing Banks.
40. Various Acquirers not named as defendants participated as co-conspirators in
the alleged unlawful conduct and entered into anti-competitive agreements, including
agreements with each other, Visa, and the Issuing Banks. Pursuant to these
agreements, the Acquirers entered into merchant agreements with merchants across
Canada, including the Visa Class Members, which imposed standard anti-competitive
terms and conditions, including the Merchant Restraints. The agreements resulted in
the imposition of supracompetitive rates for Merchant Discount Fees paid by the Visa
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Class Members. Visa, CIBC, Desjardins, RBC, Scotiabank, and TD are jointly and
severally liable for the actions of, and damages allocable to, the co-conspirator
Acquirers. These co-conspirator Acquirers include, without limitation, Moneris Solutions,
TD Merchant Services, Global Payments, Peoples Trust, First Data, Elavon, Desjardins
and Chase Paymentech Solutions.
41. During the Class Period, senior executives and employees of Visa, CIBC,
Desjardins, RBC, Scotia bank, and TD and other co-conspirators, acting in their
capacities as agents for the defendants and co-conspirators, engaged in
communications, conversations and attended meetings with each other. As a result of
the communications and meetings, Visa, CIBC, Desjardins, RBC, Scotiabank, and TD
and their co-conspirators unlawfully conspired or agreed to:
(a) impose the Merchant Restraints set out in the Visa Rules on merchants
including the Visa Class Members and thereby unreasonably increase the
rates of Merchant Discount Fees paid by merchants, including the Visa
Class Members, for payments made using Visa credit cards in Canada
including British Columbia;
(b) fix, maintain, increase or control the rates of Merchant Discount Fees in
Canada including British Columbia;
(c) exchange information in order to monitor and enforce adherence to the
agreed upon Merchant Restraints in Canada including British Columbia;
and
(d) control the supply of credit card network services in Canada including in
British Columbia.
42. In furtherance of the conspiracy, during the Class Period, Visa, CIBC, Desjardins,
RBC, Scotiabank, and TD, their co-conspirators, and their servants and agents:
(a) increased or maintained the default rates for Merchant Discount Fees in
Canada, including British Columbia;
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(b) controlled the supply of credit card services by imposing the Visa Rules
including the Merchant Restraints on merchants in Canada, including in
British Columbia;
(c) communicated, in person and by telephone, to discuss and fix the default
rates for Merchant Discount Fees in Canada, including British Columbia;
(d) exchanged information regarding the rates for Merchant Discount Fees
and the volume of transactions using Visa credit cards for the purposes of
monitoring and enforcing adherence to the agreed upon Merchant
Restraints;
(e) took active steps to, and did, conceal the rates of the constituent elements
of Merchant Discount Fees from all merchants; and
(f) disciplined any Acquirer which failed to impose the Merchant Restraints or
any merchant which failed to comply with the Merchant Restraints.
43. Visa, CIBC, Desjardins, RBC, Scotiabank, and TO and their co-conspirators were
motivated to conspire and their predominant purposes and predominant concerns were
to:
(a) harm the plaintiff and other Visa Class Members by requiring them to pay
supracompetitive rates for Merchant Discount Fees; and
(b) illegally increase their profits.
44. The acts alleged in this claim to have been done by Visa, CIBC, Desjardins,
RBC, Scotiabank, and TO were authorized, ordered and done by the respective officers,
directors, agents, employees or representatives of each while engaged in the
management, direction, control or transaction of its business affairs.
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THE MASTERCARD CONSPIRACY
45. Various Issuing Banks, including the defendants BMO, Capital One, CIBC, Citi,
MBNA, National, and RBC, along with others not named as defendants, participated as
co-conspirators in the alleged unlawful conduct and entered into anti-competitive
agreements, including agreements with MasterCard, each other, and other Issuing
Banks regarding the rates of Interchange Fees paid to Issuing Banks by Acquirers
within the MasterCard credit card network. MasterCard, BMO, Capital One, CIBC, Citi,
MBNA, National, and RBC are jointly and severally liable for the actions of, and
damages allocable to, the co-conspirator Issuing Banks.
46. Various Acquirers not named as defendants participated as co-conspirators in
the alleged unlawful conduct and entered into anti-competitive agreements, including
agreements with MasterCard, each other, and the Issuing Banks. Pursuant to these
agreements, the Acquirers entered into merchant agreements with merchants across
Canada, including the MasterCard Class Members, which imposed standard anti-
competitive terms and conditions, including the Merchant Restraints. The agreements
resulted in the imposition of supracompetitive rates for Merchant Discount Fees paid by
the MasterCard Class Members. MasterCard, BMO, Capital One, CIBC, Citi, MBNA,
National, and RBC are jointly and severally liable for the actions of, and damages
allocable to, the co-conspirator Acquirers. These co-conspirator Acquirers include,
without limitation, Moneris Solutions, TD Merchant Services, Global Payments, Peoples
Trust, First Data, Elavon, Desjardins and Chase Paymentech Solutions.
47. During the Class Period, senior executives and employees of MasterCard, BMO,
Capital One, CIBC, Citi, MBNA, National, RBC, and their co-conspirators, acting in their
capacities as agents for MasterCard and the co-conspirators, engaged in
communications, conversations and attended meetings with each other. As a result of
the communications and meetings MasterCard and the co-conspirators unlawfully
conspired or agreed to:
(a) impose the Merchant Restraints set out in the MasterCard Rules on
merchants, including the MasterCard Class Members, and thereby
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unreasonably increase the rates of Merchant Discount Fees paid by
merchants, including the MasterCard Class Members, for payments made
using MasterCard credit cards in Canada including British Columbia;
(b) fix, maintain, increase or control.the rates of Merchant Discount Fees in
Canada including British Columbia;
(c) exchange information in order to monitor and enforce adherence to the
agreed upon Merchant Restraints in Canada including British Columbia;
and
(d) control the supply of credit card network services in Canada including in
British Columbia.
48. In furtherance of the conspiracy, during the Class Period, MasterCard, BMO,
Capital One, CIBC, Citi, MBNA, National, RBC, and their co-conspirators and their
servants and agents:
(a) increased or maintained the default rates for Merchant Discount Fees in
Canada, including British Columbia;
(b) controlled the supply of credit card services by imposing the MasterCard
Rules including the Merchant Restraints on merchants in Canada,
including in British Columbia;
(c) communicated, in person and by telephone, to discuss and fix the default
rates for Merchant Discount Fees in Canada, including British Columbia;
(d) exchanged information regarding the rates for Merchant Discount Fees
and the volume of transactions using MasterCard credit cards for the
purposes of monitoring and enforcing adherence to the agreed upon
Merchant Restraints;
(e) took active steps to, and did, conceal the rates of the constituent elements
of Merchant Discount Fees from all merchants; and
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(f) disciplined any Acquirer which failed to impose the Merchant Restraints or
any merchant which failed to comply with the Merchant Restraints.
49. MasterCard, BMO, Capital One, CIBC, Citi, MBNA, National, and RBC, and their
co-conspirators were motivated to conspire and their predominant purposes and
predominant concerns were to:
(a) harm the plaintiff and other MasterCard Class Members by requiring them
to pay supracompetitive rates for Merchant Discount Fees; and
(b) illegally increase their profits.
50. The acts alleged in this claim to have been done by MasterCard, BMO, Capital
One, CIBC, Citi, MBNA, National, and RBC were authorized, ordered and done by their
respective officers, directors, agents, employees or representatives of each while
engaged in the management, direction, control or transaction of its business affairs.
CAUSES OF ACTION
Civil Conspiracy
51. The acts particularized in paragraphs 40-51 were unlawful acts directed towards
the plaintiff and other Visa and MasterCard Class Members, which unlawful acts the
defendants knew in the circumstances would likely cause injury to the Plaintiff and other
Visa and MasterCard Class Members and, as such, the defendants are each liable for
the tort of civil conspiracy. Further, or alternatively, the predominant purpose of the acts
particularized in paragraphs 40-51 was to injure the plaintiff and the other Visa and
MasterCard Class Members and the defendants are jointly and severally liable for the
tort of civil conspiracy.
Breach of the Competition Act
52. Further, or alternatively, the acts particularized in paragraphs 40-51 are in breach
of section 45 of Part VI of the Competition Act, RS 1985, c 19 (2nd Suppl.)
("Competition Acf'), were and are unlawful, and render the defendants jointly and
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severally liable to pay damages and costs of investigation pursuant to s 36 of the
Competition Act.
53. Further, or alternatively, the acts particularized in paragraphs 40-51 were in
breach of section 45 of Competition Act at the time the acts were committed, and hence
were unlawful.
Unlawful Interference with Economic Interests
54. Further, or alternatively, the acts particularized in paragraphs 40-51 were
unlawful acts undertaken by the defendants with the intent to injure the plaintiff and the
other Visa Class Members and MasterCard Class Members, and the defendants are
jointly and severally liable for the tort of unlawful interference with economic interests.
55. The plaintiff and the other Visa and MasterCard Class Members suffered
damages as a result of the defendants' unlawful interference with their economic
interests.
DAMAGES
56. The plaintiff and the other Class Members suffered the following damages:
(a) the rates of Merchant Discount Fees have been maintained at and/or
increased to a supracompetitive level; and
(b) competition in the supply of Visa and MasterCard credit card network
services has been lessened.
57. During the period covered by this claim, the plaintiff and the other Visa Class
Members and MasterCard Class Members entered into standard form merchant
agreements with Acquirers containing the Merchant Restraints imposed pursuant to the
Visa Rules and MasterCard Rules, respectively, and paid excessive and
supracompetitive Merchant Discount Fees. By reason of the alleged violations of the
Competition Act and the common law, the plaintiff and the other Visa and MasterCard
Class Members paid more for Visa and MasterCard credit card network services than
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they would have paid in the absence of the illegal agreements and, as a result, they
have been injured in their business and property and have suffered damages in an
amount presently undetermined (the "Merchant Discount Fee Overcharge").
PUNITIVE DAMAGES
58. The plaintiff pleads that the defendants' conduct as particularized in paragraphs
40-51 was high-handed, outrageous, reckless, wanton, entirely without care, deliberate,
callous, disgraceful, wilful, in contumelious disregard of the plaintiff's rights and the
rights of each Visa and MasterCard Class Member, indifferent to the consequences
and, as such, renders the defendants jointly and severally liable to pay punitive
damages.
UNJUST ENRICHMENT, CONSTRUCTIVE TRUST, AND WAIVER OF TORT
59. In the alternative, the plaintiff waives the tort and pleads that she and the other
Visa and MasterCard Class Members are entitled to recover under restitutionary
principles.
60. The defendants have each been unjustly enriched by the receipt of the Merchant
Discount Fee Overcharge. Visa and MasterCard Class Members have suffered a
deprivation in the amount of such Merchant Discount Fee Overcharge.
61. Since the Merchant Discount Fee Overcharge that was received by the
defendants from the Visa and MasterCard Class Members resulted from the
defendants' wrongful or unlawful acts, there is and can be no juridical reason justifying
the defendants' retaining any part of such overcharge.
62. The defendants are constituted as constructive trustees in favour of the Visa and
MasterCard Class Members for all of the Merchant Discount Fee Overcharge because,
among other reasons:
(a) the defendants were unjustly enriched by receipt of the Merchant Discount
Fee Overcharge;
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(b) the Class Members suffered a deprivation by paying the Merchant
Discount Fee Overcharge;
(c) the defendants engaged in inappropriate conduct and committed a
wrongful acts by engaging in the conspiracies alleged in this claim;
(d) the Merchant Discount Fee Overcharge were acquired in such
circumstances that the defendants may not in good conscience retain
them;
(e) justice and good conscience require the imposition of a constructive trust;
(f) the integrity of the marketplace would be undermined if the court did not
impose a constructive trust; and
(g) there are no factors that would, in respect of the artificially induced
overcharge, render the imposition of a constructive trust unjust.
63. The plaintiff pleads that equity and good conscience requires the defendants to
hold the Merchant Discount Fee Overcharge in trust for the plaintiff and the other Visa
and MasterCard Class Members and to disgorge that amount to the plaintiff and the
other Class Members.
JURISDICTION
64. There is a real and substantial connection between British Columbia and the
facts alleged in this proceeding. The plaintiff and other Visa and MasterCard Class
Members plead and rely upon the Court Jurisdiction and Proceedings Transfer Act
RSBC 2003 Ch 28 (the "CJPTA") in respect of these defendants. Without limiting the
foregoing, a real and substantial connection between British Columbia and the facts
alleged in this proceeding exists pursuant to ss1 0 (f)- (i) of the CJPTA because this
proceeding:
(f) concerns restitutionary obligations that, to a substantial
extent, arose in British Columbia;
:11005-001:00307515.1}
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(g) concerns a tort committed in British Columbia;
(h) concerns a business carried on in British Columbia; and
(i) is a claim for an injunction ordering a party to do or refrain
from doing anything in British Columbia.
PART 2: RELIEF SOUGHT
65. The plaintiff, on its own behalf, and on behalf of the Visa and MasterCard Class
Members, claims against the defendants:
(a) a declaration that the defendants, and each of them, participated in
conspiracies to impose and maintain the Merchant Restraints and/or
Merchant Discount Fees in the period beginning at least March 23, 2001
to the present in violation of statutory, common law, and equitable laws as
alleged in this claim;
(b) an order certifying this action as a class proceeding against Visa, CIBC,
Desjardins, RBC, Scotiabank, and TD, and appointing the plaintiff as
representative plaintiff in respect of the Visa Class Members;
(c) an order certifying this action as a class proceeding against MasterCard,
BMO, Capital One, CIBC, Citi, MBNA, National, and RBC, and appointing
the plaintiff as representative plaintiff in respect of the MasterCard Class
Members;
(d) general damages for conspiracy and unlawful interference with economic
interests;
(e) general damages for conduct that is contrary to Part VI of the Competition
Act;
(f) an injunction enjoining the defendants from conspiring or agreeing with
each other, or others, to impose the Merchant Restraints;
: 11005-001,00307515.1}
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(g) an injunction enjoining the defendants from conspiring or agreeing with
each other, or others, to to raise, maintain, fix and/or stabilize the rates of
Merchant Discount Fees;
(h) punitive damages;
(i) costs of investigation and prosecution of this proceeding pursuant to s 36
of the Competition Act;
(j) pre-judgment and post-judgment interest pursuant to the Court Order
Interest Act, RSBC 1996, c 78, s 128; and
(k) such further and other relief as to this Honourable Court may seem just.
PART 3: LEGAL BASIS
66. The plaintiff pleads and relies upon the Class Proceedings Act, RSBC, 1996 c
50, the Competition Act and the CJPTA.
67. Further, the plaintiff claims that the acts particularized in paragraphs 40-51 were
unlawful acts directed towards the plaintiff and the other Visa and MasterCard Class
Members which unlawful acts the defendants knew in the circumstances would likely
cause injury to the plaintiff and the other Visa and MasterCard Class Members, and the
defendants are each jointly and severally liable for the tort of civil conspiracy.
68. Further, the predominant purpose of the acts particularized in paragraphs 40-51
was to injure the plaintiff and the other Visa and MasterCard Class Members and the
defendants are each jointly and severally liable for the tort of civil conspiracy.
69. Further, the acts particularized in paragraphs 40-51 were unlawful acts intended
to cause the plaintiff and. the other Visa and MasterCard Class Members economic loss
and constituted unlawful interference with the economic interests of the Visa and
MasterCard Class Members and render each of the defendants jointly and severally
liable to pay the resulting damages.
: 11005-001.·00307515.1}
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70. Further, and in the alternative in the circumstances set out above, the plaintiffs
are entitled to claim based on equitable and restitutionary principles.
Plaintiffs address for service:
BRANCH MACMASTER LLP #141 0 - 777 Hornby Street Vancouver, BC V6Z 154
Tel: (604) 631-6299 Fax: ( 604) 631-3429 E-mail: [email protected]
Defendants' address for service:
TO:
Visa Canada Corporation c/o Paul Richardson Farris, Vaughan, Wills & Murphy LLP 25th Floor, 700 West Georgia Street, Vancouver, BC V7Y 1 83
AND TO:
MasterCard I ntemational Incorporated 200 Purchase Street Purchase, NY 10577 USA
AND TO:
Bank of America Corporation 101 South Tryon Street Charlotte, NC 28255 USA
AND TO:
BMO Financial Group First Canadian Place 100 King Street West Toronto, ON M5X 1A1
: 11005-00J,00307515.1}
AND TO:
Bank of Nova Scotia Scotia Plaza 44 King Street West Toronto, ON M5H 1 H1
AND TO:
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Canadian Imperial Bank of Commerce Commerce Court Toronto, ON M5L 1G2
AND TO:
Capital One Financial Corporation=Ca_pital One Bank (Canada Branchj 1680 Capital One Drive Mclean, VA 22102 USA 9nd p.o. Box 515~Scarborouah Stn. D Scarborough. ON M1 R5N4
AND TO:
Citigroup Inc. 399 Park Avenue New York, NY 10043 USA
AND TO:
Federation des caisses Desjardins du Quebec 2 Complexe Desjardins PO Box 9000, Desjardins Station Montreal, PQ H5B 1 H5
AND TO:
National Bank of Canada Inc. 600 de Ia Gauchetiere St W Montreal, PQ H38 4L2
AND TO:
lll 005-001/00307515.1}
Royal Bank of Canada 200 Bay Street Toronto, ON M5J 2J5
AND TO:
Toronto-Dominion Bank PO Box 1 Toronto Dominion Centre Toronto, ON M5K 1A2
Place of trial: Vancouver Law Courts
The address of the registry is:
Date: March 28. 2011
: 11Cl05-00li00307515.1}
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800 Smithe Street, Vancouver, B.C. V6Z 2E1 ·-----
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ENDORSEMENT ON ORIGINATING PLEADING OR PETITION FOR SERVICE
OUTSIDE BRITISH COLUMBIA
There is a real and substantial connection between British Columbia and the facts
alleged in this proceeding and the plaintiff and other Class Members plead and rely
upon the Court Jurisdiction and Proceedings Transfer Act RSBC 2003 Ch 28 (the
"CJPTA") in respect of these defendants. Without limiting the foregoing, a real and
substantial connection between British Columbia and the facts alleged in this
proceeding exists pursuant to ss1 0 (f)- (i) of the CJPTA because this proceeding:
(f) concerns restitutionary obligations that, to a substantial
extent, arose in British Columbia;
(g) concerns a tort committed in British Columbia;
(h) concerns a business carried on in British Columbia; and
(i) is a claim for an injunction ordering a party to do or refrain
from doing anything in British Columbia.
: ll005-UOI•tl03075l 5.1 ~
-25-
Rule 7-1 (1) of the Supreme Court Civil Rules states:
( 1) Unless all parties of record consent or the court otherwise orders,
each party of record to an action must, within 35 days after the end
of the pleading period,
(a) prepare a list of documents in Form 22 that lists
(i) all documents that are or have been in the party's
possession or control and that could, if available, be
used by any party at trial to prove or disprove a
material fact, and
(ii) all other documents to which the party intends to refer
at trial, and
(b) serve the list on all parties of record.
APPENDIX
PART 1: CONCISE SUMMARY OF NATURE OF CLAIM:
This proposed class action claim involves allegations of a price fixing conspiracy in the
market for credit card network services.
PART 2: THIS CLAIM ARISES FROM THE FOLLOWING:
A personal injury arising out of:
D a motor vehicle accident
0 medical malpractice
0 another cause
:I 1005-00J,Q0307515.1}
A dispute concerning:
0 contaminated sites
D construction defects
D real property (real estate)
D personal property
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~ the provision of goods or services or other general commercial matters
D investment losses
D the lending of money
D an employment relationship
D a will or other issues concerning the probate of an estate
D a matter not listed here
PART 3: THIS CLAIM INVOLVES:
~ a class action
D maritime law
D aboriginal law
D constitutional law
D conflict of laws
D none of the above
D do not know
:II 005-00 I ,00307515.1 }
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PART 4:
1. Class Proceedings Act, RSBC, 1996 c 50
2. Competition Act, RS 1985, c 19, (2nd Supp)
tlltl05-1101iU0307Sl5.l}